Financial News

Nationwide Pre-Tax Profit Up 303% To £677m

The Nationwide building society has reported an annual pre-tax statutory profit of £677m, up more than 300% on the figure last year.

It said that total income for the year ended April 4 was up 16%, at £2.9bn.

The mutual added that gross mortgage lending in the period was up 31% to £28.1bn, giving it a market share of almost 15%.

The number of mortgagees in three-month arrears is 0.63% compared to an industry-wide figure of 1.59%, due to what it called a "prudent approach to lending".

The high street lender has seen a wave of new accounts opened up as disillusioned customers flee its bigger rivals.

It said that during the reporting period 430,000 new current accounts were opened up, an increase of 18% on the previous year.

Nationwide now has 5.5 million current accounts taking its total share to 6.2%, up from 5.7% last year.

The lender said it offers a "compelling alternative to the established banks" and is now a "modern mutual".

Group retail executive director Chris Rhodes told Sky News: "The reality is we are ranked by customers on customer service and out members tend to stay with us.

"And 11% of all current account switching was to Nationwide - we are growing against everyone except Santander."

He added: "A traditional mutual focuses on traditional customers and governance, but Nationwide as a modern mutual holds the values of a traditional business while able to cover all of today's consumers."

Sky News City Editor Mark Kleinman first revealed the boost in account holders it received amid distrust with mainstream rivals.

Nationwide said its credit card business growth rate had reduced amid competitive alternatives offered by rivals.

It opened 272,000 new credit card accounts compared to 350,000 a year beforehand.

But outstanding card balances increased by 12.9% to £1.7bn.

Its tax charge for the year was £128m, giving it an effective rate of 18.9% - more than 4% below the statutory rate.

Just under a third of all Nationwide mortgages are in Greater London, with 35% in central and northern England.

Home movers accounted for 32% of new loans, first time buyers 31%, re-mortgaging 22% and buy to let 14%.

CEO Graham Beale said there could be early signs of a natural correction to house price rises in London, but warned that measures to cool capital prices might have a negative impact elsewhere.

Mr Rhodes told Sky News: "London is up 20% on pre-crash prices while elsewhere it is 2% below pre-crash values.

"The activity we see and feedback from estate agents indicates the London market is slowing a little. We don't see a bubble so we don't see it bursting. The disparity between areas may ease as a result of the correction."